News: 1MDB Scandal Cost M'sia LRT3 And All Other Mega Projects

Jul 17, 2018

 
Finance Minister Lim Guan Eng said the scrapped large-scale projects could have been implemented if billions of dollars in taxpayers’ money have not been misappropriated in the 1MDB corruption scandal and other “‘mini 1MDBs”, reported The Star.

“We would have been able to afford all these including the originally planned LRT3. The 1MDB scandal itself costs us RM50 billion, this year we have to pay over RM1 billion to settle its debts,” he said on Monday (16 July).

He also alleged that the previous administration wasn’t honest on the actual cost of LRT3 when it announced a price tag of RM10 billion.

“Many people didn’t believe the [original] cost then, but alas the actual cost is RM32 billion after we found a letter dated March 2018 from Prasarana.”

In the letter, the government-owned transport firm requested approval to issue an additional RM22 billion government guaranteed bonds due to an expectation that LRT3’s final cost of would reach RM31.65 billion.

Then on Monday, Prasarana admitted that it had known that the RM10 billion initial estimated cost for LRT3 is insufficient, reported The Edge.

“Prasarana was fully aware that the initial cost of LRT3 (RM10 billion) was inadequate, and a substantial increase would be needed for the project to be completed.”

“The RM10 billion government guarantee, which was approved on March 2015, only took into account the cost of work package contracts and supply of feeder buses (RM9 billion), as well as land acquisition (RM1 billion).”

It also excluded contingency fund, fees for the project delivery partner (PDP) and PDP reimbursable cost, along with the goods and services tax (GST) that is no longer necessary. It also did not take into account owner’s cost including contributions to utilities companies, staff wages and more.

“Prasarana currently awaits instructions from the Finance Ministry on the rigorous and comprehensive cost rationalisation to be approved. Finance Minister Lim Guan Eng had announced that the cabinet had approved a reduced cost of RM16.6 billion,” it said.

The new federal government was able to slash LRT3’s cost by 47 percent by removing stations with low demand, without compromising the safety and quality of service of the entire rail network.

“Nevertheless, provisions have been made for new stations to be built, or existing stations to be upgraded when demand increases in the future,” added Prasarana.
 

Image sourced from Star Online

 
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
 

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CHONG SENG PROPERTY
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